Dr David McGrath

Spine Physician

MB BS (Hons) FAFOM, RACP, FAFMM
Master of Pain Medicine

Decision making, in all areas of life,can be analized,as an evaluation, of competing options (mutually exclusive)
This is a relatively simple process, when "what you see is what you get"
All that is required,under those circumstances,is to write a complete list, and compare value. Going into a freshfood market is a good example. The items are easily compared, with a price tag. Value for money comparisons are straightfoward. The situation, is only made slightly more complicated, with hidden data, such as, nutrition and taste information which may not be available. (hence the free tastings).
Decision making, is much harder when we need to project into the future. Investment decisions, require a judgement, about future performance of a company or asset. Now we enter, the domain of probability, or "crystal ball gazing". We have to compare choices on the basis of expected value and outcome.

Here's the maths.

ChoiceExpected Outcome	Value	Probability of Value Realization	Expected Value
Choice A	10	90%	9
Choice B	60	10%	6
Choice C	15	100%	15
Choice D	40	60%	24
Choice E	25	20%	5

With these numbers, the rational choice is "D". D was , not the choice with the greatest absolute value (B) nor the choice with the greatest certainty (C), but overall would give the best expected outcome.
The situation is only slightly more complicated,when negatives can occur.

ChoiceExpected Outcome	Positive Event Value	Probability Positive Event	Negative Event Value	Probability Negative Event	Expected Value
Choice A	10	90%	-15	80%	-3
Choice B	60	10%	-40	20%	-2
Choice C	15	100%	-20	30%	+9
Choice D	40	60%	-40	80%	-8
Choice E	25	20%	-50	10%	0

Now, the optimal (rational) choice is "C"

Medicine and spinal treatments, often involves many competing choices. Most of them have negative possibilities, which are not always taken into account. When they are considered, in a rational manner, as above, the decision often changes.